Bassanese Bites: A glimmer of hope? – May 09 2022

Global markets

Such is the potentially oversold nature of global equity markets in at least the short-term, stocks managed to surge last week on the day the U.S. Federal Reserve delivered the widely expected 0.5% interest rate increase – merely because Fed chair Powell seemingly ruled out larger 0.75% rate increases at future meetings. Wow, that’s a relief!

Of course, a day later markets saw reason again and slumped. Indeed, the Fed still seems likely to hike rates a further 0.5% at the mid-June meeting and again at the late-July meeting. Friday’s U.S. April payrolls report highlighted the challenges ahead, with continued solid employment growth and a still low unemployment rate of 3.6%. My long-held target of U.S. 10-year bond yields at 3% was achieved, and my anticipated equity market correction continues to drag on. Rising bond yields and a stronger $US have conspired to drag down gold prices in recent weeks, while talk of an EU-wide ban on Russian oil imports (at least by year-end) has seen oil rebound back over US$100/barrel.

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